Retail

Walmart Stumbles, Warns on Profits

Walmart-supplied BlackFriday 2012
courtesy Wal-Mart Stores Inc.
The world’s largest retailer is not having a good day. Wal-Mart Stores Inc. (NYSE: WMT) issued a profit warning Friday morning, citing higher contingency payments in Brazil, higher lease expenses in China and a restructuring of Sam’s Club stores in the United States. The company cut its earnings per share (EPS) guidance by an additional $0.15.

Walmart had already indicated that it would take one-time charges of $0.11 per share related to store closings in Brazil and China and the termination of its franchise and supply agreements in India.

The company’s prior estimates for fourth-quarter and full-year EPS were $1.60 to $1.70 and $5.11 to $5.21, respectively, excluding one-time items. The company’s CFO now says that EPS will be “at or slightly below the low end” of both ranges.

The consensus estimate for quarterly EPS is $1.65 and the full-year estimate calls for EPS of $5.17, roughly the mid-point of the two ranges. Those estimates are virtually certain to be lowered. In the fourth quarter of 2012, Walmart posted EPS of $1.67 and full-year EPS in 2012 was $5.02.

Regarding U.S. same-store sales for the company’s fourth quarter, ending Friday, Walmart said it expects sales, excluding fuel, to be “slightly negative” to its earlier guidance of flat sales at Walmart stores and flat to up 2% at Sam’s Club stores. Walmart will release fourth-quarter and full-year results on February 20.

The stock traded down about 1% in Friday’s premarket, at $74.00 in a 52-week range of $68.13 to $81.37.

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